Depressed disposable income shifting consumer spending to foods
• How improved control of operating expenses, strategy aided PZ’s revenue
Although latest indicators showed that the nation’s inflation rate is easing, local manufacturers like PZ Cussons Nigeria Plc have attributed the shifting spending on food and basic amenities to other durable goods on consumers’ depressed disposable incomes.
According to the National Bureau of Statistics (NBS), the latest inflation rate stood at 16.01 per cent as food prices recorded an eight-year high in July this year.Indeed, for PZ Cussons, it has had to increase focus on its core brands through various initiatives by reviewing and streamlining its product portfolio to keep operations lean and make the firm more adaptable to changes in the environment.
Specifically, the firm explained that the shift in consumer spending was witnessed in its electrical goods business when compared to the family care business.Preparatory to its yearly general meeting scheduled for Abuja tomorrow, the firm noted that it remains focused on its strategic initiatives aimed at driving shareholder value and sustaining long-term growth.
The Chairman of the company, Chief Kola Jamodu explained that its strategies aided growth in the family care business as the segment recorded revenue of 22 per cent for the year.“This was driven by the strategic initiatives undertaken in our focus brands, the streamlined portfolio, the consolidated and simplified route to market as well as the improved planning and execution capabilities in our supply chain area.
“The electrical goods business was flat in revenue compared to last year. This was driven by depressed disposable incomes for consumers, which have seen demand shifting from durable consumer goods to foods and other basic necessities.
“The improved revenue and improved and improved control of operating expenses spurred Group Profit before taxation (PBT), which grew by 53 per cent from N3.15billion to N4.8billion. This was achieved despite foreign exchange losses N8.8 billion (2016 2.8billion) which were incurred during the year as a result of the significant depreciation of the Naira against the US Dollar”, he added.Jamodu noted that the firm’s consolidated revenue grew by 15 per cent from N69.5 billion in prior year to N79.6 billion in the 2017 financial year ended May 31.
“This result was achieved through initiatives on our key brands and the improved capabilities in our supply chain that we have built over the past few years. Both initiatives made us more adaptable and agile in an increasingly competitive market”, he explained.
To improve access to market, Jamodu said the company opened a N3 billion new modern and expanded distribution centre in Abuja during the year and also invested in new production facilities for energy saving home electrical appliances, to the tune of N1billion.
“Overall, our company has done well growing both the top line and bottom line even under challenging economic conditions. Our balance sheet remains strong with total assets of N90.1 billion compared to N74.4 billion in the previous year. We sustained our strong cash position, which makes us flexible and agile to fund operations and pursue any business opportunities that may arise”, Jamodu said.
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